True Cost of Cheap Domino's Pizza

JimB on 11/02/2017 - 02:33

Given that Domino's is a favourite amongst OZBs, here's an interesting article on the practices of running a Domino's Pizza franchise:

http://www.theage.com.au/interactive/2017/the-dominos-effect…

I've also wondered how a Domino's Pizza franchisee (or many franchisees) make money once head office takes their cut. In many instances they don't.

It seems to me that head office don't really care if or how a franchisee makes a profit on these super cheap pizza as head office takes a cut on turnover. Pizza Hut have also followed Domino's lead to $5 pizzas to win back market share.

I'm sure that 99% of Ozbargainers don't give a shit as long as they get their 30/40/50% coupons, but one really feels for the franchisee who has perhaps put his life savings into buying a franchise only to lose money or the workers who are shafted on a fair salary.

I've always wondered how the cost of living has gone up, yet it cost me less to buy a pizza (with a voucher) than it did 30 years ago.

It's a race to the bottom, except that Domino's the corporation has made a killing at the expense of many franchisees (I'm sure some turn a profit) and the workers.

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Comments

  • airal3rt on 11/02/2017 - 04:12
    +11

    Many franchised businesses run at a loss for a period of time and then shut down when the losses mount too high, leaving the franchisee with next to nothing from their huge investment. Corporations LOVE franchising their business as it mitigates risk for them. Franchise does well, great they take their cut and make a profit. Franchise loses a ton of money and goes under, fine they still got their cut and the franchisee assumed most of the risk and is left picking up the pieces.

    You have to do a ton of research before becoming a franchisee, the corporations will paint a rosy picture with cost analysis and revenue predictions that never match reality. Any surefire location would open as and remain a head office run location instead of being franchised out.

    • JimB on 11/02/2017 - 08:48
      +2

      I've always suspected this was the case for many franchises.

      I'm sure a minority of franchises make lots of money but most don't. Most of them, you're just buying a job.

      They are quick to sell the dream and just as quick to pull the rig from under you.

      I agree that any surefire location would be a company owned store.

      Anyway just wanted to say that I feel sorry for many franchisees.

    • BensonP on 11/02/2017 - 07:23
      +11

      Know the difference.

    • JimB on 11/02/2017 - 08:41
      +4

      This is the typical Ozbargainer response I expected where saving a dollar is above all else.

    • Marcsie on 11/02/2017 - 09:17

      So what do you care then ?

      • supnigs super skids on 11/02/2017 - 11:48

        Playing medic in BF1 but then to teabag taunt fallen team mates first person view.

    • Samwise Gamgee on 11/02/2017 - 11:20

      I couldn't care less if you move to the US where people will understand what you're talking about.

  • EightImmortals on 11/02/2017 - 08:25

    $5 Pizzas? lols ……

    • JimB on 11/02/2017 - 08:49

      The choice of takeaway for Ozbargainers.

      • EightImmortals on 11/02/2017 - 08:59

        Can't wait till I can get coupons for cheap open heart surgery…… :)

        • AlienC on 11/02/2017 - 11:02

          You are not meant to eat it every day and as your only meal haha lul

          Think of it as your cheat/reward/guilt free day once a month or season.

  • supnigs super skids on 11/02/2017 - 08:41

    So those coupons are killing the franchisee, well 30% of them in any given week

    • JimB on 11/02/2017 - 08:52

      I wouldn't say coupons are killing them as I suspect only a few percentage of total sales would be using a coupon, just the everyday cheap $5 or whatever deals and head office's fees.

  • sclass on 11/02/2017 - 09:03

    So will me buying a bunch of pizzas from Domino's using coupons tonight be having a negative impact on the workers?

    • cloudy on 11/02/2017 - 09:31
      +2

      TO be fair, it is not just the franchisee that may be affected by this.

      As the article said, if they are pushed to the wall they may start skimping on ingredients. Like less dough per pizza.

      Or maybe the hygiene of the place is slack (since they already work like 60hrs a week), or maybe if a pizza or some ingredients slips on the floor it might still be ok to serve up, I mean they don't wanna just throw away money.

      All this pressure they feel, u may end up eating.

      edit:Sorry to reply to you Victory, was suppose to reply to the thread.

      • JimB on 11/02/2017 - 09:47

        I never thought about that, but you raise a very valid point.

        I suppose they can't skimp on dough with mine as I prefer a thin crust.

        If I get a paper thin crust in future, I'll now know why.

    • JimB on 11/02/2017 - 09:44
      +1

      I don't think so, they may be under the pump but that's not your fault.

      It's the practice of head office which forces franchisees to cut corners to survive, whether that be quality of product or staff salary.

  • SharedSugar on 11/02/2017 - 09:33

    There is a free session on franchising in South Australia this week.
    http://www.sasbc.sa.gov.au/events/156_franchising_in_a_nutsh…

    • JimB on 11/02/2017 - 09:54

      Sounds like a fantastic resource for those who are unaware oemr underestimated the pitfalls.

  • Nugs on 11/02/2017 - 10:05
    +1

    I must say that was a good read, but can you believe everything that is on the internet?

    reminds me of 'the story of stuff'. watch it if you haven't and make your own mind up.

    I am not surprised. Making pizza at home costs around $5 too.

    I've gone off them anyway, just checked and last order was mid-October last year.

    local pizza shop does 3 for $25 and they are much nicer.

    home made pizza;
    2x twin pack bases $6
    bottle tomato paste $3
    tin crushed pineapple $3
    leftover sandwich ham/bacon/taco mince/chicken
    tomato $1
    bag mozzarella $6
    four pizzas for $19 plus electricity

    • AlienC on 11/02/2017 - 11:06

      I personally only life it fur the novelty feature in that I can just rock up pretty much any time from between noon and midnight and sometimes mostly later and get a $5 pizza in 15-20 minutes. Plus no clean up.. really spoils you for convenience and (being) lazy/ness.

    • nubzy on 11/02/2017 - 11:14

      I make them at home sometimes too but they are not cheap to make at all. I put a bit of everything and it adds up to quite a lot. I make the base from scratch too, much better than premade base and it doesn't take long, just have to wait while it rises. It is also a very messy and time consuming exercise. Dominos is great for convenience but I can't remember the last time I had them either.

  • c64 on 11/02/2017 - 10:26
    +1

    apparently the parent company of pizza hut forces franchisees to sell cheap pizzas at below cost and some franchisees have gone tits up as a result: http://www.themorningbulletin.com.au/news/495-pizza-has-kill…

    hot tip: don't buy a pizza hut franchise :)

    • Aniseed Steed on 11/02/2017 - 11:15
      +1

      Even hotter tip: don't buy a franchise if you think franchises are low-risk business investments.

      I'd rather be the franchisor who sits back and collects the royalty fees (while dictating all the terms) from the people who run the stores.

  • havebeerbelywillsumo on 11/02/2017 - 11:03

    Refuse to buy this cardboard crap anymore.

  • AlienC on 11/02/2017 - 11:14

    Only reason I liked dominos in the first place was because it was the only thing still open after 10pm before before then maccas and KFC started late night opening hours then 24 hour "restaurants".

    Still a trip to your local woolies or coles for since fruits and veggies address much cheaper and healthier imho but coming home from a long day of work or uni unless the local Chinese restaurant was doing a good deal below $10 these garbage discounts were the only thing really available to financially struggling students.

    Thankfully those days are gone now and I can afford the good stuff and the only real time I have this fast food crap is out of pure convenience or slightly warped nostalgia.

    Every lan party or birthday party I remember back as a teenager was involved with some sort of pizza hut or dominos haha lol and now my body is paying for it.

  • [Deactivated] on 11/02/2017 - 13:16
    -1

    only time i ever ordered dominoes was when i milked the pizza mogul promotion

  • try2bhelpful on 11/02/2017 - 14:16
    +1

    Can't stand any of these franchise stores; I would much prefer to buy my food from someone who has built their reputation up by the quality of their food and their service. So typical of every big industry that the guys at the top rake it in by screwing the guys actually delivering to the customer. Go out and find your local cafe, fish and chip shop, Souvlaki place - you will get a much better feed and the profits aren't going to an overpaid headoffice.

    • cloudy on 11/02/2017 - 14:50

      but u do understand why people go though, I mean Ozb epitomises it with hundreds of up votes with $5 pizzas.

      • try2bhelpful on 11/02/2017 - 15:34

        I do understand there is a price point that makes it attractive - but the "cost" of the pizza is not just the dollars you pay out, but the human and environmental effects as well. I'm not going to get up on my soapbox, but the expression "hell in a handcart" is becoming more and more true.

        • cloudy on 12/02/2017 - 10:46

          I totally understand. You can say something similar to a lot of things, especially on ozbargain, and I've argued as such before as well. Clothing is a easy case in point.

  • punkindrublic on 11/02/2017 - 15:10
    +1

    And of course Dominos HQ is shi**ing all over their franchisees and claiming they knew nothing about the huge amount of malpractice going on. Just like 7-Eleven, who scotched their internal inquiry into dodgy practices after realising just how extensive the rot was and how much they were going to be liable for.

    These corporate office types are all scumbags who are happy to let their workers suffer so long as they can get someone else to take responsibility for the bad behaviour. I hope Fair Work, the ACCC and any other relevant agency comes in hard and squeezes them dry

    • tonyjzx on 11/02/2017 - 15:37

      Seems to be a common trend… global conglomerates getting rich off underpaid staff and then washing their hands of this mess but at least they added some shareholder value.

      I'm not sure a complete boycott helps them hurts them?

    • [Deactivated] on 16/02/2017 - 14:49
      +1

      CEO has come out on the front foot

      http://www.theage.com.au/business/retail/dominos-ceo-don-mei…

      Quick tip Donny, when you have to desperately massage the total employee numbers to make the number of underpaid staff look smaller, you've got a problem

  • universe on 11/02/2017 - 15:21
    +2

    Dominoes is trash even with a coupon

  • capslock on 12/02/2017 - 11:30
    -1

    People want to become Dominos franchisees because it is a popular brand. It is up to the franchisee to do their own research to make sure owning a Dominos store is suitable to their needs. If they don't like how head office runs things then they should get out or not become a franchisee in the first place.

    It sounds like there's a queue of people wanting to become franchisees therefore it allows head office to keep doing what they want.

    • tonyjzx on 12/02/2017 - 22:13
      +1

      But just because there's heaps of dumb people, should a multinational exploit this? Where's the morality?

  • SharedSugar on 13/02/2017 - 07:56

    O

  • 8200 on 13/02/2017 - 18:26
    -1

    domino = pizza….LOL

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